If you’re the one responsible for covering the household expenses, you’ve likely expected that electricity costs will soon be on the rise again.
Household electricity prices are expected to rise in 2024 as power generation companies will be subjected to higher taxes due to their carbon emissions.
As estimated by the National Climate Change Secretariat (NCCS), this increased carbon tax could, on average, result in an additional cost of about $4 per month for a four-room Housing Board flat.
Electricity Bills in S’pore Projected to Rise in 2024
While we know now that electricity bills are set to rise next year, electricity providers have yet to provide specific information regarding the upcoming price adjustments.
In 2024, Singapore’s carbon tax is scheduled to increase to $25 per tonne of emissions, a substantial rise from the current rate of $5 per tonne.
The tax is slated to further increase to $45 per tonne of emissions in 2026, with plans to set it within the range of $50 to $80 per tonne of emissions by the year 2030, as reported by The Straits Times.
The carbon tax began in 2019 at $5 per tonne and was initially set to last for five years until 2023.
This timeframe allowed a transition period for facilities emitting at least 25,000 tonnes of emissions each year.
NCCS determined that for every $5 increase in the carbon tax, household electricity prices could increase by about 1%.
In 2024, this could mean a potential 4% increase in electricity bills.
In Singapore, households can choose a pricing plan from an electricity provider or purchase power from SP Group at the regulated tariff established by the Energy Market Authority.
When contacted by The Straits Times, electricity providers declined to provide any details regarding the electricity price hike.
Geneco, a prominent electricity retailer commanding almost 27% of the market share, stated that tariffs will be modified in response to any changes in the carbon tax.
Senoko Energy told The Straits Times that while the carbon tax component is expected to influence electricity prices, it may also motivate businesses and households to reassess their electricity consumption habits to reduce energy usage and waste.
Reasons for Price Hike
In addition to the carbon tax, other significant factors influence electricity plan pricing, according to PacificLight.
One of these crucial factors is the prevailing fuel price.
PacificLight, a power-generation company and electricity retailer, is actively working on a project situated on Pulau Bulan in Indonesia. This initiative aims to harness solar power and import electricity from this source.
To enhance its environmental efficiency, PacificLight has invested over $30 million in upgrading its Jurong Island plant.
This includes the enhancement of its turbines, a move anticipated to result in a substantial reduction of 40,000 tonnes of emissions annually once the improvements are completed in 2024.
Boosting the energy efficiency of power plants is one strategy employed to mitigate the impact of the carbon tax on retailers that are also involved in electricity generation.
Furthermore, Tuas Power is transitioning toward employing energy sources with lower carbon emissions, such as solar and biomass, for electricity generation.
Besides impacting power stations, the higher carbon tax will also affect the water sector starting next year.
In Singapore, the production of water relies on electricity.
For example, the process of desalination, which plays a role in supplying the country’s water, demands energy to extract salt from seawater.
To mitigate the impact of the carbon tax and water price hikes in 2024 and 2025, eligible Singaporean HDB households will receive an additional $20 per quarter in U-Save rebates from January 2024 to December 2025.
This amounts to $80 per year in total.
On average, these supplementary U-Save rebates are expected to fully offset the increase in utility bills for one- to two-room flats over the next two years.
Three- to four-room flats are expected to cover about 80% of the increase, and larger flats, approximately 65%.
As part of its global commitment to combat climate change, Singapore has set a goal to reduce greenhouse gas emissions to around 60 million tonnes by 2030.
Emissions are projected to peak at approximately 65 million tonnes between 2025 and 2028 before gradually declining toward achieving net-zero emissions by 2050.